California Supreme Court ruling could be bad news for San Diego redevelopment

In a decision with far-reaching impacts for local redevelopment, the California Supreme Court today upheld a new state law abolishing the Los Angeles Community Redevelopment Agency and hundreds of similar agencies across the state, but ruled that a companion law forcing CRAs to give a portion of their tax revenues to the state was unconstitutional.

The ruling was a major blow to redevelopment agencies, which sued earlier this year to block both laws. Since the court ruling aborted the plan to allow local governments to buy back into redevelopment, the agencies will be phased out when their contracted projects are completed.

The California Redevelopment Association and League of California Cities, the plaintiffs in the lawsuits, called on lawmakers immediately'' to develop legislation to revive the agencies.

Without immediate legislative action to fix this adverse decision, this ruling is a tremendous blow to local job creation and economic advancement,'' said association board president Julio Fuentes, adding that it was not the Legislature's original intent to completely abolish the agencies.

Redevelopment agencies are funded by the increase in tax revenues generated by projects in their areas. The agencies use the revenue to invest in additional projects mainly in blighted parts of cities.

The court was unanimous in its opinion that the state had the right to dissolve redevelopment agencies when the Legislature deems it necessary and proper.''

However, six of the court's seven justices agreed that Proposition 22, passed by voters in March, forbids the state from forcing municipal agencies to transfer money to the state, and ruled the law invalid.

Chief Justice Tani Cantil-Sakauye dissented on that point, saying the law does not compel'' community redevelopment agencies to violate Proposition 22.

Supporters of the agencies argue they are the best economic development tool to catalyze redevelopment projects that private investors would otherwise not build.

Gov. Jerry Brown hailed the court's ruling, saying that it validates a key component of the state budget and guarantees more than $1 billion of ongoing funding for schools and public safety.''

He said the agencies long ago stopped being a catalyst to reinvigorate blighted neighborhoods.

Unfortunately, over the years it evolved into a honey pot that was tapped to underwrite billions of dollars worth of commercial and other for-profit projects that had nothing to do with reversing blight, but everything to do with subsidizing private real estate ventures that otherwise made no economic sense,'' Yaroslavsky said.

Reacting to the state court's decision, San Diego Mayor Jerry Sanders said, “This is a sad day for San Diego. Plain and simple, this money grab by the governor will have severe negative impacts on our neighborhoods and our economy for decades to come. Redevelopment has been an incredibly effective tool for eliminating blight, increasing the affordable housing supply and creating jobs. We’re not going to stand by idly and let the progress our communities are making simply die off; we’ll begin working immediately with our state legislators to pass new laws giving us tools enabling reinvestment in our lower-income communities.”

San Diego County District Attorney and Mayoral candidate Bonnie Dumanis also reacted negatively to the legal decision.

“San Diego is America’s Finest City today in no small part due to the success of our local redevelopment efforts,” she said. “Sacramento politicians should have left well enough alone, and not interfered with a program that has successfully put local tax revenue to work locally, created jobs, and transformed our city for the better.”

“When the legislature abolished redevelopment agencies earlier this year it did not discriminate between those programs that have worked well — like San Diego’s — and those that haven’t. Instead, the legislature’s actions have led to today’s Supreme Court decision that leaves us with the worst possible outcome for San Diego. Today’s decision is a major setback to our job creation efforts locally and I call upon the legislature to get back to work in restoring redevelopment as a critical tool to building and rebuilding our cities.”